Lack of quality malls in key cities in the country, which could provide proper infrastructure and attract footfall, is discouraging high-end and luxury retailers from expanding further, said a report.
“Many key cities in India have faced supply constraints in terms of the right quality of malls, which is discouraging high-end and luxury retailers to expand,” Jones Lang LaSalle India, a real estate services company said in its recent research report ‘Retail Realty In India - Evolution and Potential’.
The report said in the recent past, the main reasons for growth in the retail sector were improved infrastructure, expansion of cities and the right supply of retail malls.
The report highlighted that Indian cities are witnessing demand from all types of retailers -- big-box, high-end as well as luxury segments -- backed by strong city fundamentals - economy, population and income.
Mumbai and Delhi have witnessed an influx of big-box, fast-fashion and high-end retailers.
Other cities such as Bangalore, Pune and Chennai have also seen reasonably good absorption of retail spaces on the back of high consumerism supported by strengthening IT-ITeS sector and the strong auto, manufacturing and biotech sectors, the report said.
It said the retailing landscape varies significantly across Indian markets, as cities differ greatly in size, maturity, purchasing power and socio-cultural factors.
“With the passage of time, rising incomes, urbanization and westernisation are changing the character of mature markets, while presenting new opportunities to retailers and real estate developers in emerging cities,” the report said.
According to the report, Mumbai has the maximum potential for organised retail to grow because of infrastructure, stock and supply of office spaces.
“As the city (Mumbai) continues to expand and its boundaries and new cities continue to emerge within the city, the need for organised retail space is also expected to grow,” the report said.
NCR Delhi is a relatively more matured retail market than Mumbai and takes second position in terms of market potential, the report said.
According to it, Bangalore, where population comprises mainly of the young IT crowd, is the third largest city in terms of the quantum of organised retail space development.
“High disposable incomes and the aspirations of young adults make Bangalore one of the country's top destinations for organised retail,” the report said.
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